Fox News: Brand In Demand

Roger Ailes, the pugnacious chairman-CEO of the Fox News Channel, is killing his friend-and soon-to-be-former CNN News Group Chairman-CEO-Walter Isaacson with kindness."Walter was a bit underrated," he said, using a term rarely applied to the highly regarded Mr. Isaacson. "He did a better job than people say. But Fox News was a juggernaut destined to become No. 1."

Through a spokeswoman, Mr. Isaacson-who abruptly announced Jan. 13 he would leave CNN in the spring-said, "I appreciate Roger's assessment." He referred to a 70% growth in CNN's prime-time audience since he came on: "I'm glad he noticed."

Others may disagree with Mr. Ailes' home-team bluster and lack of subtlety. (He calls CNN's international channel "their anti-American brand," which a CNN spokeswoman said had "no basis in truth.") Still, many numbers speak loudly. For late September '02 through mid-January, Fox drew a prime-time audience in the coveted 25 to 54 demographic that doubled CNN's-533,000 to 266,000, according to Nielsen Media Research audience figures. For full-year '02, Fox averaged 1.2 million viewers to CNN's 898,000.

The victory's not entirely won, as Fox's ad revenues and costs-per-thousand rates continue to trail CNN's. CNN does not divulge ad revenue figures, but they're believed to be $450 million, according to media agency executives. For Fox's last fiscal year, which ends June 30, its ad revenue rose 72% to about $135 million. Paul Rittenberg, senior VP-ad sales, said the channel would end up with around $200 million in sales for calendar '02 and predicted the channel would get $300 million in '03.

`follow the eyeballs'

That figure is "probably aggressive," said Jessica Reif Cohen, a Merrill Lynch analyst. But Ms. Cohen, who counted herself as a major doubter of Fox News when it launched in October `96, conceded that "the money will follow the eyeballs."

This may eventually prove disappointing to media buyers, who currently feast on Fox's lower CPMs and higher Nielsen ratings. "Fox is less expensive and more efficient," said Aaron Cohen, exec VP-broadcast media for Horizon Media, who said he felt the demographics for both Fox and CNN were "very similar."

The question is if a halo effect will take hold, as it has with CNN. "CNN basically being a global brand" has "more value-that is probably true," said Peggy Green, president-national broadcast for Zenith Media, New York. "The question is, is Fox catching up to their brand essence? ... The perception always was CNN was a stronger news brand. Maybe that's not the case right now."

Another challenge is more of a cultural one: Can Fox, which defined itself against the backdrop of CNN and the existing media establishment with an insurgent's zeal, maintain its edge and footing with its lead in its niche?

Mr. Ailes, predictably, expects the fight to continue.

"We enjoy being shot at," he said. "The part that irritates people is that we will fight back."